H & M Hennes & Mauritz AB Three-month report

Regulatory News:

H & M Hennes & Mauritz AB: (STO:HMB)

First quarter (1 December 2014 — 28 February 2015)

• Well-received collections for all brands in the H&M group resulted in good sales and increased market share. The H&M group’s sales including VAT increased in local currencies by 15 percent during the first quarter. Converted into SEK, sales excluding VAT amounted to SEK 40,276 m (32,143), an increase of 25 percent.
• Gross profit increased by 26 percent to SEK 22,213 m (17,641), which corresponds to a gross margin of 55.2 percent (54.9).
• Profit after financial items increased by 35 percent to SEK 4,723 m (3,486).
• The group’s profit after tax increased to SEK 3,613 m (2,649), corresponding to SEK 2.18 (1.60) per share, an increase of 36 percent.
• H&M’s first store in Taipei, Taiwan, was very well received on its opening in mid-February.

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• Sales in the period 1 March – 21 March 2015 increased by 9 percent in local currencies compared to the same period last year.
• The H&M group plans a net addition of around 400 new stores for the financial year 2014/2015. New markets for store expansion in 2015 are, Taiwan, which opened in February, Peru and Macau which will open towards the end of the first half-year, and South Africa and India, which will open during the second half-year.
• Nine new online markets will open in 2015: Portugal, Poland, the Czech Republic, Romania, Slovakia, Hungary, Bulgaria and Belgium will open during the spring and Switzerland will open in the autumn.

Comments by Karl-Johan Persson, CEO

"We have made a very good start to 2015 – in terms of both sales and profits. Our attractive customer offering and strong expansion both through stores and online, as well as our work on continuous improvement, are among the reasons for increased market share gains and good profits.

During the first quarter we increased sales by 15 percent in local currencies and by 25 percent in SEK compared to the corresponding quarter last year. Profit after financial items increased by 35 percent to more than SEK 4.7 billion. We achieved this strong increase despite our continued long-term investments within areas such as online and IT with the aim of building an even stronger H&M for the future. It is very important to always be able to meet customers’ shopping demands and expectations in the fast digitalising development that is taking place in the retail market.

Already during the spring, we are opening eight new H&M online markets: Portugal, Poland, the Czech Republic, Romania, Slovakia, Hungary, Bulgaria and Belgium. During the autumn we will also open our online store in Switzerland.

In February we opened in our latest store market, Taiwan, where we have had a very good reception since opening our first H&M store in Taipei. The next market in line is Peru, where we plan to open our first H&M store during the spring in Lima. In Macau in Asia we plan to open the first H&M store in the summer and an additional store will open later in 2015.

Another example of an exciting upcoming opening is our new flagship store on Herald Square in New York, which will be one of our largest stores in the group with an area of 5,700 square metres in total. So we have many interesting openings to look forward to – both as regards stores and online. In total, we plan to open 400 new stores net and nine new online markets this year, enabling us to reach more and more customers every day.

At the same time as this expansion is going ahead, we are continuing to broaden our product range and to develop further our various other brands COS, & Other Stories, Monki, Weekday and Cheap Monday, which are all becoming more and more established in the world of fashion. H&M Sport and our extended shoe range have been well received, and we will now launch them in more stores. And in the autumn we are looking forward to offering our customers our latest initiative, H&M Beauty – our new beauty concept that will be launched in an inspiring shopping environment which will further strengthen our customer offering.

As a part of our sustainability work we will shortly be launching our "H&M Conscious Exclusive” collection in 200 selected stores and online. We have set high sustainability goals; over the two last years, for example, we have almost doubled the share of more sustainable cotton used in our product range. If you want to know more about our sustainability work, our latest sustainability report "H&M Conscious Actions Sustainability Report 2014” will be available on hm.com as of 9 April.

As mentioned, the year has got off to a very good start and we have great faith in our offering. Although the strong US dollar will affect our sourcing costs going forward, we will make sure that we always have the best customer offering in each individual market.”

The information in this interim report is that which H & M Hennes & Mauritz AB (publ) is required to disclose under Sweden’s Securities Market Act. It will be released for publication at 8.00 (CET) on 24 March 2015. This interim report, and other information about H&M, is available at www.hm.com

H & M Hennes & Mauritz AB (publ)

SE-106 38 Stockholm

Phone: +46-8-796 55 00, Fax: +46-8-24 80 78, E-mail: info@hm.com

Registered office: Stockholm, Reg. No. 556042-7220

H & M Hennes & Mauritz AB (publ) was founded in Sweden in 1947 and is quoted on NASDAQ OMX Stockholm. The company’s business concept is to offer fashion and quality at the best price. In addition to H&M, the group includes the brands COS, Monki, Weekday, Cheap Monday, & Other Stories as well as H&M Home. The H&M group has more than 3,500 stores in 57 markets including franchise markets. In 2014, sales including VAT amounted to more than SEK 176.6 billion and the number of employees was more than 132,000. For further information, visit www.hm.com.

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